 Optimal ordering policies for a retailer who offers distinct trade credits to its good and bad credit customersJinn-Tsair Teng International Journal of Production Economics, 2009, vol. 119, issue 2, 415-423 Abstract: In practice, to reduce default risks, a retailer frequently offers its bad credit customers a partial trade credit, in which the retailer requests its customers to pay a portion of the purchase amount at the time of placing an order as a collateral deposit, and then grants a permissible delay on the rest of the purchase amount. By contrast, the retailer usually provides a full trade credit to its good credit customers without the collateral deposits. For generality, in this paper, I establish an economic order quantity (EOQ) model for a retailer who receives a full trade credit by its supplier, and offers either a partial or a full trade credit to its customers. The proposed model is in a general framework that includes numerous previous models as special cases. I then analyze the characteristics of the optimal solution, and provide an easy-to-use closed-form optimal solution. Finally, I use a real-world inventory problem to illustrate the proposed model and its optimal solution. Keywords: Inventory; EOQ; Partial; trade; credit; Permissible; delay; in; payments (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:119:y:2009:i:2:p:415-423 Access Statistics for this article International Journal of Production Economics is currently edited by Stefan Minner More articles in International Journal of Production Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.